Pugh: Really big shifts
Members of the public are more aware than ever about class actions and more positive about their outcomes, research has found.
However, eight out of 10 consumers believed that class actions “mostly make money” for litigation funders and lawyers, and a majority thought they could result in “financial losses” for claimants.
Portland Communications said this year had seen “the highest level of public awareness of class actions” since it began collecting data on the issue in 2020.
The report, Reputation and Accountability: Class Actions, ESG and Values-Driven Litigation, was based on responses from over 2,000 members of the public, including 540 senior business leaders.
The proportion of consumers expressing high levels of awareness of class actions rose to 24%, a five percentage point (pp) increase from last year’s report, while the proportion expressing low levels of awareness dropped from 39% to 34%.
Awareness “increased amongst younger groups and mostly stagnated with older groups”, which researchers said could be “due to several factors, including the recent prominence of group actions aimed specifically at younger people”, such as the student group claim against UCL.
Nearly two-thirds of respondents would sign up to a class action against a company, organisation or institution if they were given the chance, reflecting perhaps that public perceptions of class actions achieving “positive outcomes” for claimants – such as compensation for those affected and holding companies accountable – were on the rise.
However, four in five of consumers, especially among older people, believed that class actions “mostly make money” for litigation funders and lawyers.
“Winning compensation, holding large companies to account, and helping consumers are all considered to be less likely.”
Portland observed that media coverage on class actions over the past year has “often emphasised criticism about red tape in the compensation process for major claims, with complaints that legal teams may be slowing down payments”.
For instance, in September, despite being an open and active pro-funding figure, Sir Alan Bates told Radio 4’s Today programme that “there are far too many lawyers involved, and it seems the lawyers are making the money in this and not victims”.
The lack of trust in lawyers and funders coincided with “a continued public belief that collective actions may even result in a financial losses for those affected”.
Despite “massive public interest and media attention” relating to claims backed by litigation funders, such as those against the Post Office, 62% of consumers said they had a ‘low’ understanding of litigation funding, up from 49% in last year’s report.
Yet there was “large public acceptance” that class actions could not be brought without external investment, and a preference for this than the public paying for it themselves.
“The large public support for litigation addressing ESG issues and the acceptance of external investment for these claims will be welcome news for funders. However, a lack of public understanding coupled with the belief that funders mainly benefit from class actions presents a significant reputational obstacle for the funding community.”
While people understood how they could be affected by companies that have a large or dominant share of the market, that “has not translated into an awareness of their eligibility to claim damages” in high-profile Competition Appeal Tribunal (CAT) cases.
After being presented with the class definitions for the live CAT cases, only 43% of people were comfortable that a claim they were eligible for was being pursued without their knowledge, with 30% uncomfortable.
“This will be a point of reflection for claimant firms when considering the investment in their class engagement strategies and the importance of building awareness as soon as possible.”
On climate change, researchers found that most consumers (53%) viewed shareholder activism “positively as a tool to address accountability for a company’s failure to mitigate climate risks”, up from 46% last year.
Meanwhile, 77% of senior business leaders agreed that company directors had a duty to ensure a company’s climate risks were properly managed, 5pp higher than the figure for consumers, which was up by 10pp.
Two-thirds of business leaders agreed that an increase in group claims would lead to improvements in corporate behaviour.
Researchers commented: “Whether through group litigation or shareholder action, corporates are confronting growing risks from potential failures in their obligations and increasingly face reputational harm.
“As we have seen in this year’s report, the public is more aware of and comfortable with class actions. However, the industry faces a task in engaging the public, driving awareness, and scepticism of the role of lawyers and funders.”
Simon Pugh, partner and head of the litigation and disputes practice at Portland, added that the data showed “some really big” shifts.
“It’s possible that we are starting to see a paradigm shift in the way the public views litigation in the context of ESG issues.”
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